Anonymous
Am 24yo this year, currently still 27k from Uni loans. I’m paying $500 a month so it will take me 4 more years. I’m also investing $400 a month ($100 on StashAway and $300 on STI ETF). Am just wondering if this is a smart move or should I be using all $900 towards my debt first.
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Pay loan first
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Depending on the interest rate of your loan, you should consider repaying your loans first. If your loan interest rate is relatively high at 4-5%p.a. and your investments are not able to give you that kind of return, then overall you are still losing money. At 24yo, you will also be taking on more responsibilities and liabilities in the coming years, probably within the 4 years of uni loan repayment, so you also want to make sure you have more loans than you can cope with. Hence I'd suggest using the money towards your debt first.
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Basically what you're doing is borrowing $400 monthly from the bank in order to invest. So it depends heavily on what rate you are borrowing at.
If you are confident that your investments will be able to make above that rate, then it makes sense. (Though you may want to consider also the emotional aspects of being debt free vs being stressed out about investments during periods of volatility.)
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Elijah Lee
20 Nov 2019
Senior Financial Services Manager at Phillip Securities (Jurong East)
Hi anon,
Personally, I'll accelerate the repayment of my uni loan first. The interest can be relat...
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I would suggest clearing your debts first. Debts are fixed but returns from investments aren’t. Once you clear your debts, you will feel the burden lifted.